EU labels ChatGPT a search engine, first AI to face $780m fines

The European Commission designated ChatGPT as a "Very Large Online Search Engine" under the Digital Services Act, exposing OpenAI to fines of up to 6 percent of its $13 billion annual revenue — roughly $780 million — for non-compliance.

"ChatGPT, Reddit and Roblox will now be held to a higher standard of scrutiny and accountability in the European Union, in line with their large impact on our citizens and society," Henna Virkkunen, the EU's technology chief, said.

The designation marks the first time an AI chatbot has been classified as a search engine under the DSA, placing ChatGPT alongside Google and Microsoft's Bing as one of only three very large online search engines. OpenAI reported more than 159 million monthly active users in the EU at the end of March, exceeding the 45 million threshold. Reddit, with 57 million EU users, and Roblox, with 46.6 million active players, were simultaneously designated as Very Large Online Platforms.

The three services have four months to comply with additional obligations, including assessing and mitigating risks tied to illegal content, effects on minors, and users' physical and mental well-being. Companies found in breach face fines of up to 6 percent of global annual turnover — for OpenAI, that could mean as much as $780 million based on its $13 billion in 2025 revenue — and, in cases of serious and repeated violations, a possible ban from operating in Europe.

The DSA designation adds a second layer of regulatory oversight on top of the EU's AI Act, which entered into force in 2024 and imposes risk-management obligations on high-risk AI systems. Lena-Maria Boswald of German tech think tank Interface said the move could set a precedent and influence regulatory expectations for every large generative AI system used in the EU. "OpenAI already has risk-management obligations under the AI Act, but the DSA could widen the scope," she said.

EU Enforcement Escalates as DSA Fines Top €670m

The EU has stepped up enforcement against major digital platforms in recent years. In July, it charged Chinese e-commerce giant AliExpress a record €550 million for allowing the sale of illegal products. In 2025, it fined Elon Musk's X platform €120 million for deceptive blue-tick verification practices. The bloc recently ordered TikTok to address what it deemed addictive design or face heavy DSA fines.

An OpenAI spokesman said: "ChatGPT search operates as a search service under the DSA, and we are preparing to meet the additional compliance requirements that come with this Very Large Online Search Engine designation."

The designation comes as the EU has escalated regulatory pressure on US technology companies despite pushback from Washington and threats of retaliation. Around 30 services are now listed for extra scrutiny under the DSA, most owned by major technology companies including Google, Apple, Microsoft, TikTok, X, Amazon and Shein.

For OpenAI, the compliance burden extends beyond content moderation. The company must now assess systemic risks across electoral processes, public security, fundamental rights and the physical and mental well-being of users — a broader mandate than the AI Act's risk tiers. The four-month compliance window ends in late January, when ChatGPT must submit its first risk assessment report to the Commission.

The precedent set by classifying a chatbot as a search engine could reshape how the EU regulates generative AI tools that increasingly serve as information gateways. If other AI assistants — from Google's Gemini to Meta's AI products — cross the 45 million EU user threshold, they too would face DSA obligations, potentially expanding the regulatory perimeter well beyond traditional platforms. For investors, the designation adds regulatory risk to AI-related equities, with Microsoft's stake in OpenAI making the compliance burden a direct concern for the software giant's shareholders.

This article is for informational purposes only and does not constitute investment advice.